Two weeks ago, Bear Stearns was battling to keep embattled former hedge fund manager Ralph Cioffi in the fold. But last week, the two parties unceremoniously parted ways, as federal investigators looking into the collapse of two hedge funds Cioffi ran for the firm have turned their eye to the fund manager himself.

Cioffi was replaced as manager of the Bear Stearns High Grade Structured Credit and High Grade Structured Credit Enhanced Leverage funds in June, as the two funds collapsed amid this summer’s subprime mortgage troubles. But he had remained on as an adviser to Bear, which earlier this month was trying to persuade Cioffi—who was reportedly planning to launch a hedge fund of his own—to stay at the firm.

He left Bear last week, Bloomberg News reports, because his advisory role in unwinding his two former funds, in which investors lost $1.6 billion, was complete.

Word of his departure comes on the heals of a report that the U.S. Attorney’s Office in Brooklyn, N.Y., and the Securities Exchange Commission are probing Cioffi’s withdrawal of $2 million of his own money from one of the funds in March, just weeks before the two funds ran into trouble. Cioffi moved the money—which represented about one-third of his investment—to another internal fund he had set up.

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